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November 23, 2008

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Even if they're funded by the government, it would be hard to get rid of the perverse incentives, because presumably a regulatory agency is going to get more funding if it oversees more & bigger companies.

giving banks what they want is not what regulators ought to be doing.

Yet it looks as if Larry Summers will be Obama's senior economic adviser. His track record is to give banks and the other predatory entities in our financial system what they want.

A crony-protecting, corrupt, arrogant doctrinaire free-marketeer -- this is really the best counsel available as we head deeper into the worst economic crisis in eighty years? If the rumor of delaying repeal of the Bush tax cuts turns out to be true, our collective chumpdom will be complete.

Much more of this crap and we're going to need to "go shopping for Regulators" in a Billy The Kid / Young Guns sort of way.

The answer to cowboy banking? Why, unregulated regulators. Neoclassical economics at its best! This is not a tragedy. It is a farce.

Nell: If the rumor of delaying repeal of the Bush tax cuts turns out to be true, our collective chumpdom will be complete.

That actually gives me a lot of comfort that the dude will deal with reality. You really think that a tax hike is the way to deal with this?

You really think that a tax hike is the way to deal with this?

For purposes of stimulus, net tax changes matter a lot more than whether any one tax change is a tax hike. So yes, raising taxes on the upper brackets in conjunction with an equivalent lowering of taxes on lower brackets seems like a perfectly fine idea.

You really think that a tax hike is the way to deal with this?

What Turbulence said.

Also, some sort of tax hike will be absolutely essential if we wish to continue to borrow money at something below payday loan rates. Stimulus or no, not borrowing really isn't an option right now - we can't even fund the current budget out of our incoming revenue. Skip a tax hike and watch the yield curve blow up - the bond markets really don't much care to hear people complain about taxes, it sounds too much like "future defaults".

Of course if you want to find out what it will be like when Treasury auctions start failing and the cost of servicing our existing debt balloons up to say 40% of the federal budget, then that might be an interesting way to finally slay the Military Industrial Complex dragon.

Too much collateral damage for my taste, though. I kinda doubt Eisenhower would have approved.

"You really think that a tax hike is the way to deal with this?"

The Bush tax cuts put the federal budget on an unsustainable path. So yes, what Turbulence said.

Psychological dudes - if nothing else. I know you don’t believe this, but there are actually folks who will lay off employees or close up shop rather than pay more in taxes. They are out there. How many? We’ll see I guess…

I know you don’t believe this, but there are actually folks who will lay off employees or close up shop rather than pay more in taxes.

Are we talking about raising the top marginal rate on income from 36% to 39% for folks making more than $250K?

You know folks who are going to lay off their employees and close up shop because they're pissed at having to pay 3% more on their income above a quarter of a million bucks?

I hope you're talking about something else.

If that is what you're saying, all I have to add is folks like that can go to hell. And they can kiss my you know what on their way down.

They should also watch their six. If their former employees are smart, they'll set up shop and pick up all of their ex-boss's customers.

Thanks -

there are actually folks who will lay off employees or close up shop rather than pay more in taxes.

For any proposed tax change, there is some group of taxpayers who may respond to the changes in ways that adversely impact the economy. If you think that's a real problem, you need to make the case for it. For example, have you seen this behavior in the past when other tax hikes were executed? Can you point to any peer reviewed research by noted economists suggesting that this is both likely to happen and likely to be economically significant?

I mean, if you can't produce any evidence to justify your concern, then how is it any different from the deeply felt concerns of the clinically insane?

As I said russell, we’ll see I guess… We’ve had a couple of folks here tell us just that. If it was me? If my choice was to keep working harder in this economy to pay (3%) more in taxes or hang it up and retire – man I would be gone. No, I’m not talking about something else, and I’m guessing those folks won’t be kissing any part of your anatomy. They can afford to retire. It’s not them who will suffer. It’s the people they employ, and ultimately everyone else due to the loss of tax dollars.

Turb: Feel free to categorize me with the clinically insane. What the hell.

Apologies OCSteve. I don't think we should be making policy based on evidence-free arguments. If you've got evidence, then feel free to bring it but otherwise...can you blame me for not believing that this group of people is large enough to care about?

I mean, you voted for Obama, right? Weren't you worried that if Obama won, there'd be a lot of high income people who just couldn't stomach the thought of a black President and would either retire or move to Canada? I mean, that could really happen. If enough high income folk did that, our economy could tank. Now, I've got zero evidence that enough of these people exist to matter, but still, shouldn't you have not voted for Obama since doing so could destroy the economy by making well off racists bail out?

@OCSteve: He ran on this tax policy. He was explicit. I saw ad after ad and speech after speech. If you voted for him, did you just figure he wouldn't follow through?

Wouldn't have posted if I'd refreshed in time to see Turb asking the same question.

If my choice was to keep working harder in this economy to pay (3%) more in taxes or hang it up and retire – man I would be gone.

Then OC, nothing personal, then you should cash in your chips and go home.

The folks we're talking about have had an astoundingly good ride for the last 8 years. If they can't pony up another 3% of what they make above a quarter million to actually solve some freaking problems, then they should get the hell out.

If you're making a half million a year, you're making 10 large a week. The additional tax burden on you will be $7500. That's less than one week's income.

Those cats can get the f out. Cash in, take their nickels, and retire. Have fun, send a postcard, and get out of the f'ing way.

If they're making that kind of dough, there's a demand for whatever the hell it is they're doing. There are precious few folks who are so uniquely talented that somebody else can't step in and take up the slack.

There will be 100 other guys more than happy to take their place and make that half a million. Or that million, or two million, or billion. The fact that the top marginal rate is 39% rather than 36% will not faze them for a new york minute.

Tell your friends to pack their bags and get the hell out of the way. One of their ex-employees will be only too happy to take over their customer list and get job done.

I mean, seriously. Three points on income above a quarter million. Those guys need to get some perspective.

Three f'ing points. To give the 95% of the people who live in this damned country an inch of breathing room. That would be all it took for you to fold your tents and tell your guys to go look for another job, because this one was gone.

Dude, if the axe should ever come your way, remember your words here. And good luck.

Thanks -

mckinneyintexas, could you send me your email address again? Mine is gary underscore farber at yahoo dot com. I have the darn medical bills scanned that you wanted to see.

I also think that people that would fire (significant numbers of) people due to the "hike" (actually going back to the tax rate of the Clinton era*) would have done so already because layoffs drive their stocks up and they would be rewarded with bonuses.

*not to forget that those tax cuts had an official expiration date. That this never was meant to actually happen (that's not even denied) is another thing.

We’ve had a couple of folks here tell us just that. If it was me? If my choice was to keep working harder in this economy to pay (3%) more in taxes or hang it up and retire – man I would be gone.

Yeah, but that's because you're an evil, scumsucking Republican who wants a free ride and everyone else at the back of the queue, OCSteve. *beams politely*

Russel: Three f'ing points. To give the 95% of the people who live in this damned country an inch of breathing room. That would be all it took for you to fold your tents and tell your guys to go look for another job, because this one was gone.

That's conservatives for you. They'll do anything to anyone rather than pay their fair share.

Not to threadjack the threadjack but I remember only ONE thing from high school economics - "capture". It is the idea that a regulated industry tends to lobby and finagle their regulatory agencies into submission. They fill their regulatory agencies with people from that industry, marginalize and defund agencies, and shop around for the most lenient agency. All through the glory of the democratic process. Of course, "capture" is a complete failure of regulation and is to be avoided. I guess the regulators skipped that day of high school.

http://en.wikipedia.org/wiki/Regulatory_capture

If it was me? If my choice was to keep working harder in this economy to pay (3%) more in taxes or hang it up and retire – man I would be gone.

First of all, you wouldn't be paying 3% more on your total income, and you know it. Second of all, I don't believe this for a single, solitary second, and I don't think you do either.

I don't buy it either.

Piling on a bit -sorry - I wonder about those business owners who are going to close up shop and let their employees go because of the tax increase. Lots of good points have been made, but here are two more:

1. What are these people threatening to take their ball and go home going to live on? Is the first $250K just going to keep rolling in after the shop is closed?

2. Obama is proposing tax cuts for lower-income workers. That means, it's worth noting, that labor costs will drop somewhat, because a smaller wage will produce the same after-tax income. I haven't done any arithmetic, but won't this at least a little offset those dreadfully higher taxes the owner will pay?

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